Commerce Resources and Mont Royal to merge, creating Canadian critical minerals development company

What does the merger between Commerce Resources and Mont Royal Resources mean for Canada’s critical minerals sector?

Commerce Resources Corp. and Mont Royal Resources Ltd. have signed a definitive agreement to merge in a transaction that could redefine Canada‘s critical minerals exploration and development landscape. Announced on April 9, 2025, this all-share merger will see Mont Royal acquire 100% of the issued and outstanding shares of Commerce through a court-approved plan of arrangement under British Columbia law.

This strategic combination aims to create a dual-listed company—on the TSX Venture Exchange and the Australian Securities Exchange—focusing on rare earths, niobium, lithium, and fluorspar projects across Québec. The merger unites Commerce’s flagship Ashram Rare Earths and Fluorspar Project and the Eldor Niobium Project with Mont Royal’s Northern Lights Lithium Project, forming a diversified critical minerals portfolio at a time of intensifying global demand for battery and green energy metals.

The newly formed company will benefit from enhanced liquidity, cross-border investor access, and a board comprising executives with deep operational and capital markets experience across Canada and Australia. The merger structure values Commerce at C$17.2 million, implying a 55% premium over its pre-announcement closing share price.

How is the stock market reacting to the proposed merger?

Investor sentiment toward both Commerce Resources and Mont Royal Resources has shifted in light of the announced transaction. As of April 10, 2025, Commerce Resources’ shares (TSXV: CCE) had risen to CAD 0.07, reflecting a 16.67% gain over five days and suggesting increased investor optimism. However, the stock is still down over 12% year-to-date and has dropped more than 48% over the past year. The company’s market capitalization currently stands at approximately CAD 14.84 million, with recent trading volume nearly tripling its 65-day average.

Commerce remains a pre-revenue junior explorer, and its latest earnings per share of -CAD 0.16 reflects ongoing development expenditures, particularly for advancing the Ashram Project.

Mont Royal Resources (ASX: MRZ), on the other hand, is trading at AUD 0.041, down nearly 56% over the past year. The company has a market capitalization of approximately AUD 3.49 million and an EPS of -AUD 0.031. Despite the weaker long-term performance, the strategic merger has sparked renewed interest in the stock due to the combined asset potential.

The dual listing is seen as a key catalyst, especially as Australian markets have historically supported early-stage rare earth and lithium developers more aggressively than their North American counterparts. This market positioning may help attract institutional capital and facilitate future funding rounds for both development and exploration.

What are the strategic assets driving the merger?

At the core of this merger are three key projects with high potential for long-term value creation:

The Ashram Rare Earths and Fluorspar Project in northern Québec is Commerce’s flagship asset. The deposit hosts monazite, bastnaesite, and xenotime mineralogy, and has produced high-grade concentrates exceeding 30–45% total rare earth oxide (TREO) at high recoveries. With both rare earth and fluorspar components, Ashram could position the merged company as a low-cost global supplier to the NdPr and acid-spar markets.

The Eldor Niobium Project, also in Québec, adds further strategic depth to the portfolio. Niobium is a key input in high-strength steel and emerging battery technologies, making it increasingly important for infrastructure and energy applications.

The Northern Lights Lithium Project, held by Mont Royal, spans 536 km² in the Upper Eastmain Greenstone Belt. In addition to lithium potential, the project offers exploration upside for copper and gold. This geographic and commodity diversification strengthens the long-term value proposition of the merged group.

What are the terms of the transaction and how will it affect shareholders?

Under the terms of the agreement, each Commerce Resources shareholder will receive 2.3271 fully-paid Mont Royal shares for every Commerce share held. This equates to an implied value of C$0.093 per Commerce share based on a 30-day volume-weighted average price of AUD 0.04391 per Mont Royal share before its ASX trading suspension.

Upon completion, Commerce shareholders will hold approximately 85.3% of the combined entity, with Mont Royal shareholders owning the remaining 14.7%—a ratio expected to shift slightly following Mont Royal’s planned AUD 10 million equity raise and Commerce’s C$2.2 million convertible note financing.

All outstanding Commerce options and warrants will be adjusted in line with the exchange ratio. The deal also includes a termination fee of AUD 250,000 payable to Mont Royal in certain break scenarios.

What role does financing play in supporting the merger?

To support the immediate development of the Ashram Project and sustain working capital needs until the merger closes, Commerce Resources intends to raise up to C$2.2 million through a convertible note offering. These notes carry an interest rate of 20% per annum and will convert into Mont Royal shares upon transaction completion, with accrued interest also converting.

If the merger does not proceed within 12 months, investors will have the option to convert the notes into Commerce shares at a minimum price of CAD 0.06, with preemptive rights to participate in future equity offerings. The notes will be secured through a general security agreement, ranking pari-passu among all holders.

Mont Royal, for its part, plans to raise up to AUD 10 million via a public equity offering in Australia, the proceeds of which will advance the Ashram preliminary economic assessment, support development at Eldor, and fund exploration at Northern Lights.

How will the combined company be governed?

The post-merger board will consist of four directors: three nominated by Commerce—Jeremy Robinson, Adam Ritchie, and Chairman Cameron Henry—and one by Mont Royal, expected to be Ronnie Beevor. A new permanent CEO and President will be appointed prior to closing, replacing Jeremy Robinson, who will shift to a non-executive board role.

The transition of leadership and governance is structured to reflect the majority ownership by Commerce shareholders while integrating Mont Royal’s regional and technical expertise in lithium exploration and Australian capital markets.

What is the investment outlook following the merger announcement?

From a sentiment perspective, the merger is seen as a strategic step toward consolidation in a fragmented junior mining landscape. The combined company’s dual exposure to rare earths and lithium—two minerals essential for electric vehicle batteries and renewable energy systems—positions it to benefit from favourable long-term demand trends.

Analysts suggest three broad investor strategies depending on risk appetite:

Buy: Investors with a long-term horizon may consider the merged entity’s rare earth and lithium asset base attractive, particularly given the potential for resource expansion and capital market synergies.

Hold: Existing shareholders may wish to retain their positions to capitalise on future upside as the Ashram PEA progresses and the dual listing attracts new funding.

Sell: Investors concerned about near-term dilution or development risk—given both firms are in pre-revenue phases—may opt to reduce exposure ahead of potential market volatility surrounding approvals.

What are the next steps before transaction completion?

The transaction must clear several regulatory and shareholder hurdles before closing, targeted for July 2025. These include approval from at least two-thirds of Commerce shareholders, Mont Royal shareholders, including for its equity raise and share consolidation, TSXV and ASX regulators for the dual listing, and the Supreme Court of British Columbia for interim and final orders.

A circular detailing the agreement and fairness opinion from Evans & Evans will be sent to shareholders. Commerce insiders holding 21.8% of outstanding shares have signed support agreements backing the deal.

If all approvals are secured, Commerce shares will be delisted from the TSXV, and Mont Royal will commence trading on both exchanges as the new merged entity.